MRVL, CY: Implications Of RIM’s Q2 Slump

As the Street ponders what to do with Research in Motion (RIMM) following last night’s disappointing fiscal Q2 report and mixed outlook, several individuals are also trying to gauge the impact on RIM’s suppliers.

I noted earlier that Ticonderoga’s Brian White thinks Celestica (CLS) and Flextronics (FLX), contract manufacturers, could be helped by this quarter’s increased shipments of BlackBerrys.

Chip analyst Gary Mobley with The Benchmark Company today writes that RIM was 14% of Marvell Technology Group’s (MRVL) revenue in the fiscal year that ended in January, which probably declined to just 7% to 9% in the first half of the current fiscal year as RIM’s shipments declined.

His conclusion is that RIM “won’t be a growth driver” for Marvell in “the next few quarters.” However, the bump up in BlackBerry shipments this quarter should benefit Marvell.

Mobley has a Buy rating on MRVL.

Jefferies & Co.’s Mark Lipacis also reiterated a Buy rating on Marvell shares.�RIM is probably now only 6% of Marvell’s revenue, he estimates.

“We believe about of half of RIM products carry MRVL chips and despite QCOM�s entry into RIM’s TOUCH and BOLD smart phones, we think MRVL continues to be the major supplier of cellular and connectivity solutions to RIM,” writes Lipacis.

“Recently announced RIM�s TD-SCDMA phone BOLD 9788 uses MRVL�s PXA920 chip(624 MHz) which indicates MRVL’s continued strong partnership with RIM.”

More important, though, is that Marvell is diversifying, with expectations that six to 12 new phones using Google’s (GOOG) “Android” will come to market over the next six to nine months using its chips.

Lipacis has a $17 price target on the shares.

And Collins Stewart’s John Vinh today reiterates a Buy rating on Cypress Semiconductor (CY), whose parts are in the newly released “Bold 9900″ model BlackBerry.

At the same time Cypress parts are in the “PlayBook” tablet computer, which shipped fewer units than expected. It remains an open question, he indicates, whether RIM can resuscitate PlayBook shipments this quarter with “promotions” and new content and apps.

Marvell shares today are up 6 cents, or 0.4%, at $15.26; Cypress shares are down 25 cents, or 1.4%, at $17.29.